Response to consultation on Technical standards on the new Business Indicator framework for operational risk
Question 1: What are your views with regards to the proposal for the ILDC component? Please explain and provide arguments for your answer.
The definition of “interest earning assets” still contains in our opinion a substantial portion of assets which are actually non-interest earning, primarily from brokerage receivables and non-interest earning deposits with central banks and other banks. We recommend to clean further the metodology in this area.
Question 2: What are your views with regards to the proposal for the Services component? Please explain and provide arguments for your answer.
NA
Question 3: What are your views with regards to the proposal for the Financial component? To which extent are you carrying out operations or making accounting choices as referred to under paragraph 2, point a) of Article 9 of this draft RTS? Are you carrying out operations or making accounting choices, other than those specified under paragraph 2, point a) of Article 9 of this draft RTS, that could justify the use of the PBA? Please explain and provide arguments for your answer.
NA
Question 4: What are your views with regards to the proposal for the specification of the items to be excluded from the BI? Please explain and provide arguments for your answer.
We see only limited explanation, we expect more examples, which will show in which cases exactly banks should exclude some elements from calculation process.
Question 5: What are your views with regards to the proposed mapping of the BI items to the FINREP cells? Please explain and provide arguments for your answer.
We welcome the proposal to map FINREP cells into BIC requirements, but we see that in many cases this will need further split FINREP cells into two or three items. In case of leased assets in many undertakings it will be quite simple to extract them from the data, but in case of operational risk events we see some technical problems.
First of all, banks do not have consistent databases of operational risk events registered in line with CRR3 requirements, so it will be difficult to fulfil in appropriate way or even extract data from FINREP cells. What is also very important, in many cases events are registered with significant delay and not updated with required frequency. In context of GL on resubmission recently published it will be more expensive to update of reporting more frequently. We assume that this has not been an EBA expectation.
Question 6: What are your views with regards to consider the financial statements used for the final valuation as the only reference for the acquisition of activities under the baseline approach (i.e. full historical data)? Please explain and provide arguments for your answer.
NA
Question 7: What are your views with regards to the proposed three alternative calculation approaches instead of a unique alternative approach to be defined? Please explain and provide arguments for your answer.
In our view, requiring banks to apply among three different methods the most conservative constitutes an excessive effort. Therefore, we propose to define a ranking among these three methods, in order to apply only the first one which is feasible. Three alternative calculation approaches should be replaced by a unique alternative approach.
Question 8: What are your views with regards to not providing any alternative method but adjustment to the effective perimeter of the disposal? Please explain and provide arguments for your answer.
NA
Question 9: What are your views with regards to the inclusion of a threshold? Please explain and provide arguments for your answer, as well, if applicable, further evidence on situations where BI adjustments as set out under articles 1 and 2 would not be feasible or deemed excessively cumbersome and identify potential consequences on the dynamics of the European financial markets.
NA
Question 10: What are your views with regards to the basis for the calculation of the threshold? Please explain and provide arguments for your answer.
NA
Question 11: What are your views with regards to the level you consider would be appropriate for the threshold? Please explain and provide arguments for your answer.
NA